TORONTO - Canadians got a rare scrap of positive economic news Thursday -- manufacturing sales up for the first time since July -- but the data behind the headline remained demoralizing and general financial pain, as measured by bankruptcies, kept intensifying.
The 2.2 per cent rise in manufacturing sales to $42.9 billion in February followed a wrenching 5.3 per cent drop in the previous month. The gain came entirely from the Ontario vehicle and parts industries following widespread plant shutdowns in January. Excluding the auto sector, Statistics Canada said factory sales were down 0.2 per cent on the month.
"While tempting to breathe a sigh of relief, the monthly result belies the ongoing weakness in manufacturing," commented TD Bank economist Grant Bishop.
"Year-over-year, the decline in manufacturing shipments accelerated to an 18.7 per cent loss," Bishop noted.
"With the ongoing weakness in demand for Canada's exports, we expect ongoing year-over-year declines in manufacturing and weakness to continue until global demand regains traction."
Meanwhile, the numbers kept getting more dismal on the number of individuals and businesses being submerged under their debts.
Bankruptcies across Canada swelled 22.1 per cent in February compared with a year earlier, according to the Office of the Superintendent of Bankruptcy.
And in addition to the 9,495 consumer and business bankruptcies, February saw 2,825 formal pleas to creditors to settle debts on easier terms, up 37.5 per cent from February 2008.
There were 9,020 consumer bankruptcies in February, up 25.2 per cent from a year earlier and 13.5 per cent from January, while debt-rearrangement proposals by individuals -- headed for bankruptcy if lenders balk -- surged 38 per cent year-over-year to 2,686.
In the business sector, bankruptcies were actually down 16.5 per cent from February 2008 at 475, but debt-restructuring attempts increased 27.5 per cent to 139.
The tide of insolvency rose fastest in Alberta, with total bankruptcies and proposals up 55 per cent from a year ago, followed by British Columbia with a 45.8 per cent surge. Ontario had two-fifths of the country's total insolvencies at 5,088, up 26.9 per cent.
Another worrisome number was released Thursday: 85 per cent. That's the value of assets in federally regulated private-sector pension plans relative to their promised future benefits.
Hit by the stock market mudslide, the estimated average solvency ratio -- the current value of assets versus liabilities -- was down from 98 per cent in June, according to the Office of the Superintendent of Financial Institutions.
OSFI reports only on 400 pension funds in the financial, transport and telecom industries, but the shortfall is likely at least as bad in the nine-tenths of pension plans that are provincially regulated.
In other economic news, the Royal Bank reported that home ownership became more affordable in late 2008, as the recession took hold. The bank estimates an average family paid 50 per cent of its pre-tax income for an average two-storey house in the fourth quarter. This was down two percentage points from the July-September quarter, breaking a four-year trend of home-price increases outpacing incomes.
On the factory front, inventory levels decreased one per cent to $66.9 billion in February, the third decline in four months, but "remained extremely bloated at 1.56 times sales," a BMO Nesbitt Burns commentary observed.
"This points to ongoing manufacturing weakness ahead."
Near-record inventories of finished products press manufacturers to slow production and tend to drag down selling prices.
"Sooner or later, manufacturers will have to adjust and accelerate the decline in their inventories," noted Desjardins Group economist Benoit Durocher.
"This will then intensify the drop in production and, in turn, Canada's real GDP."
TD's Bishop observed that despite Ontario's 7.2 per cent February advance in manufacturing sales, the province's shipments were still down 18 per cent from a year earlier.
"With a pullback in its transportation sector, the slowdown in Quebec manufacturing accelerated to minus nine per cent year-over-year," he added.
"B.C. manufacturing is reeling from the waning paper and wood shipments, and Alberta continues to be stung by the slump in oil."
Bishop concluded: "While we'd love a silver lining, Canadian manufacturing remains very stressed."
